Detailed Narrative
Operational Excellence and Employee Engagement
Waste Connections achieved significant operational improvements in 2025, with employee turnover and safety incident rates declining to multiyear lows. Safety incidents were down almost 20% year-over-year in January, reaching another record low. Employee retention improved to meet the 2025 target voluntary turnover level of 10%. These improvements have driven cost savings in labor, repairs and maintenance, and risk management, alongside enhanced customer satisfaction and pricing retention.
Chiquita Canyon Landfill Management
The company continues to manage the elevated temperature landfill (ETLF) event at Chiquita Canyon, with technical aspects progressing as expected. However, political and regulatory challenges🌐 have inflated the process. Waste Connections has sought involvement from the US EPA to streamline regulatory oversight, with recent meetings indicating potential short- and long-term solutions. Leachate generation has decreased by nearly 50% from its peak, indicating the event is on a downward trajectory.
Strategic Acquisitions and Capital Returns
In 2025, Waste Connections closed 19 acquisitions, contributing approximately $330 million in annualized revenue, ranging from West Coast franchises to tuck-ins. The company expects $125 million in rollover revenue from these deals in 2026 and maintains an active pipeline. With a leverage of 2.75x debt-to-EBITDA, the company returned over $830 million to shareholders in 2025 through an 11.1% increase in quarterly dividends and over $500 million in opportunistic share repurchases.
Sustainability and AI Investments
Waste Connections is advancing its sustainability initiatives, with 5 renewable natural gas (RNG) facilities already online and the remainder expected by year-end 2026. An additional state-of-the-art recycling facility is expected online in 2027. The company's multiyear AI rollout, which began in 2025, focuses on enhancing efficiency, boosting productivity, and improving forecasting through data analytics. Early results show positive outcomes in dynamic routing, safety, employee engagement, and customer satisfaction.
Free Cash Flow and Capital Allocation Outlook
The company's 2025 adjusted free cash flow of $1.26 billion was in line with expectations, reflecting an underlying conversion of adjusted EBITDA of approximately 50%. For 2026, adjusted free cash flow is projected to increase by double-digit percentages to $1.4 billion to $1.45 billion. This includes $100 million for RNG and recycling projects and $100 million to $150 million for Chiquita Canyon outlays, with underlying FCF conversion expected to remain around 50% of EBITDA.
Northeast Corridor and Arrowhead Landfill
Waste Connections is making significant progress in its Northeast rail corridor strategy, increasing daily tonnage through its Arrowhead Landfill network from 2,300-2,500 tons/day to 7,500 tons/day. The company expects to reach 9,000-9,500 tons/day into Arrowhead by the end of 2026. This densification and internalization strategy, including multiple tuck-ins and transfer station acquisitions in the New York City metro area, is contributing to margin improvements and optimizing the Eastern region's operations.